On April 4, 2016, the U.S. Bankruptcy Court for the Eastern District of New York issued a decision that may significantly change the landscape of student debt relief. In re Decena, No. 15-72903, 2016 WL 1371031 (Bankr. E.D.N.Y. Apr. 4, 2016). Per Judge Robert Grossman, the court discharged the student loan of a hapless medical school graduate who studied at a non-accredited medical school in West Africa.
The U.S. Department of Education is continuing to move forward with issuing new regulations regarding the “Borrower Defense to Repayment Rule,” which concerns the ability of a Direct Loan borrower to seek a discharge of a Direct Loan repayment obligations if the educational services provided by a college were in some way deficient. These amendments are potentially important not only to borrowers, but also to colleges and the loan servicing industry.
Eric B. Epstein authored this article for The Banking Law Journal regarding the U.S. Supreme Court’s decision in Jesinoski and the implications of the decision for the student loan industry.
The “borrower defense to repayment” rule has received widespread attention in connection with the problem of student loan defaults, and this article authored by Dorsey partner Eric B. Epstein and Dorsey associate Jessica D. Mikhailevich seeks to place this rule in legal and historical context.